CPH Gets Green Light to Distribute its Innovative CBD Based Nutraceutical Products in the UK
While much of the business world shut down over the Christmas-New Year’s break, diversified cannabis healthcare company Creso Pharma (ASX:CPH) has been busy on a number of fronts.
The company has made some significant, market sensitive announcements as it rolls out its cannabis- and hemp‐derived therapeutic‐grade Nutraceuticals and Medical Cannabis products globally. The products have wide reaching appeal, having a broad range of applications in human and animal health.
Most recently, CPH signed commercialisation agreements to distribute its cannaQIX® range of products in the UK, where it has been given the green light to be commercialised as a Food Supplement. The cannaQIX® range are unique standardised nutraceutical products, in a proprietary delivery formulation, containing organic hemp extract with CBD, vitamins and zinc. The products aim to reduce stress and to support mental and nervous functions.
CPH had earlier signed an exclusive commercialisation agreement with the Swiss Pharma company Doetsch Grether for marketing and distributing CPH’s cannaQIX®10 in Switzerland.
The company’s global expansion continues with CPH having gained a strategic foothold in the growing Colombian market, with the acquisition of Kunna Canada Ltd and its 100%-owned Columbian subsidiary Kunna S.A.S.
The move will allow CPH to commercially cultivate medicinal-grade cannabis in Colombia, and provides the opportunity to further expand across the strategically important Latin American region.
Of course it is early stages in its ambitions here, so investors should seek professional financial advice if considering this stock for their portfolio.
CPH has also recognised the potential on offer from the cannabis and hemp infused beverage market. Recently, the company launched a joint-venture (JV) company to capitalise on growing demand for cannabis-derived beverages. It intends to develop and commercialise a bespoke portfolio of cannabis and hemp-derived alcoholic and non-alcoholic beverages containing various ingredients, seeds, extracts and terpenes from hemp and cannabis plants.
CPH also stands to benefit from changes in Australian export laws as well as the recent decision by California, and soon Canada, to allow recreational cannabis use.
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The last few months have seen Creso Pharma (ASX:CPH) continue its global expansion.
A number of newsworthy announcements have been made since we last updated you on CPH back on December 4 with the article, CPH Seal Swiss Pharma Deal: Setting the Cornerstone for Global Commercialisation of cannaQIX ® .
Strategic acquisitions and expansions into new regions, as well as timely changes in legislation, have all combined nicely for CPH. The company holds worldwide rights for a number of proprietary innovative delivery technologies which enhance the bioavailability and absorption of cannabinoids.
For a rundown on CPH’s medicinal cannabis products, market opportunities in Canada and its plans for Australia, check out this video of CPH Director of Strategic Partnerships, Chris Hession speaking to CommSec's Tom Piotrowski a month ago, on December 18:
The significant volume of newsflow out of the company over the past few months has roused investors and positively impacted the company’s share price.
As can be seen in the share price chart below, CPH has more than doubled its share price since mid-2017, with significantly increased daily trading volume — indicating investors’ enthusiasm for the company and its prospects.
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
Let’s take a closer look at the news that has supported the recent share price run...
cannaQIX®10 and 50 to be launched in the UK this quarter
This week, on 17 January 2018, CPH announced that it had secured a commercialisation agreement with UK-based Precision Healthcare to launch cannaQIX®10 and 50 in the UK. The launch is planned for the first quarter of 2018.
This is a major deal for CPH. Precision Healthcare covers over 5000 point of sales in the UK, selling and distributing consumer healthcare brands to mass retailers and independent pharmacies, as well as having a full consumer e-commerce platform.
The deal follows another significant milestone for CPH’s cannaQIX®, with confirmation from the UK Trading Standard Office (TSO) that it can be sold as a Food Supplement in the UK. Swiss regulatory authorities issued a free sales certificate for the export of the product into the UK from Switzerland.
CPH expands to Switzerland
Prior to the UK commercialisation deal, in early December, CPH signed an exclusive commercialisation agreement with Swiss Pharma company Doetsch Grether for marketing and distributing CPH’s cannaQIX®10 in Switzerland.
cannaQIX®10 complies with the Swiss Federal Food as a nutraceutical Food Supplement. CPH signed an exclusive commercialisation agreement with the highly reputed traditional Swiss Pharma company Doetsch Grether for marketing and distribution in Switzerland and Liechtenstein. The agreement is for a period of ten years and involves targeting the biggest pharmacy and drug store chains across the two countries.
CPH’s impact in these markets is yet to be seen, so investors should take all publicly available information into account and take a cautious approach to their investment decision with regard to this stock.
The cannaQIX® range of products are hemp-based nutraceuticals using CPH’s proprietary innovative delivery technology. They contain organic hemp extract with CBD, vitamins and zinc, aiming to reduce stress and to support mental and nervous functions.
The proprietary QIX-technology based delivery system contains capsicum, which accelerates the blood circulation in the mouth enhancing the buccal, sublingual delivery of the CBD, vitamins and zinc into the bloodstream.
The product is safe, well tolerated, non-euphoric and non-addictive, as well as being sugar free. The standardised, user-friendly strength and formulation allows precise dosage control, ensuring a reliable and stable effect over several days.
It provides consumers with a safe and effective certified Food Supplement with CBD, with broad market reach and without the need for a medical prescription.
Creso forms JV company to enter cannabis-derived beer market
The cannaQIX® announcement followed other market moving news less than a week earlier, when, on January 11, CPH announced that it had launched a JV company with LGC Capital and Baltic Beer Company to capitalise on growing demand for cannabis-derived beverages.
The JV company, CLV Frontier Brands Pty Ltd, intends to develop and globally commercialise a bespoke portfolio of cannabis and hemp-derived alcoholic and non-alcoholic beverages containing various ingredients, seeds, extracts and terpenes from hemp and cannabis plants.
Under the JV terms, both CPH and LGC will initially contribute €150,000 (~A$231,000) in start-up capital to CLV. Baltic Beer Company will contribute the equivalent sum by way of services to the company.
It is proposed that CLV will immediately start developing an initial premium four-beer range containing unique cannabis terpene mixes as well as other innovative ingredients. These unique terpenes will carry the flavour and aroma of cannabis and will provide a ‘sensual’ cannabis experience. The beverages won’t contain any THC or CBD, or any other cannabinoids.
The announcement was reported by finfeed.com ( a related entity of S3 Consortium Pty Ltd as defined in Section 9 of the Corporations Act 2001 ).
Cannabis laws evolve to support rapid industry growth
But it’s not just CPH market announcements that are upping interest in the company. News that California has legalised recreational cannabis use, followed by a proposed change to Australian cannabis export laws, are a win for the medicinal and recreational cannabis industries globally, and CPH specifically.
Under the new Californian law, which kicked in on New Year’s Day, adults aged 21 or older no longer need a medical license to buy and use the drug, and can use, carry and buy up to an ounce of marijuana for non-medical use, as well as grow up to six plants at home. This trend is gaining momentum — from July 2018, all of Canada is moving to legalise the personal use of cannabis.
On domestic shores, the Australian government announced it would be allowing the export of certain cannabis products to international markets — a move which needs to pass Federal parliament when it returns to sessions in February 2018. This will place Australia in a unique role as other nations scramble to find safe and legal supplies of medicinal cannabis.
The Federal Minister for Health, Greg Hunt, said, “This decision will help both the domestic supply and Australian producers by strengthening the opportunities for domestic manufacturers”.
For CPH, the Australian Government’s announcement places it in an extremely advantageous position as it confirms what it has been doing for the past 18 months, and is a major step forward to fast track the ability to get medicinal cannabis into the hands of patients who need it.
CPH acquires Colombian medicinal cannabis group, Kunna S.A.S.
CPH has gained a footprint in Latin America with the acquisition of Kunna Canada Ltd., and its wholly-owned Colombian subsidiary, medicinal cannabis group, Kunna S.A.S, as announced on 18 December 2017. The acquisition gives CPH a strategic foothold in the growing Colombian market and also the opportunity to further expand across the strategically important Latin American region.
The news was reported in Finfeed.com as well as other news outlets including Reuters:
This acquisition positions CPH as the only Australian-listed medicinal cannabis company with direct exposure to the Colombian market. And it’s a lucrative market.
Cannabis consumption in Colombia increased 15% annually in the five years from 2008 to 2013, with US$86.3 million spent in the country on cannabis in 2008. It is also a growing exporter with the country is expected to be exporting more than 40.5 tonnes of medicinal cannabis oil by 2019.
Kunna has been granted a licence to produce, manufacture, market and export cannabis derivatives and products using extracts in Colombia by the Ministry of Health, and expects to receive its licence to cultivate medicinal cannabis in Colombia during the current quarter. This will position it as one of small number of companies to have such a license.
Kunna already owns land that is suitable for medicinal cannabis cultivation and is currently progressing the first stage of its cultivation and fertiliser research project.
Colombia is ideally situated for marijuana production for many reasons, including having a newly established regulatory regime, a legion of trained agricultural workers, an ideal climate with 12 hours of sunshine on average each day, as well as access to two oceans, making easier to ship products both east and west.
CPH is acquiring Kunna for up to US$7.15 million in shares to be issued at a deemed issue price of $1.10 each, up to US$1 million in performance shares, and a US$250,000 exclusivity option payment.
Mernova Cannabis Production Facility
Further north, CPH is progressing the construction of its 20,000 square foot cannabis production facility in Nova Scotia, Canada. The company provided an update on the construction in December, describing progress as ‘strong’.
CPH acquired emerging Nova Scotia-based medicinal cannabis producer, Mernova Medicinal. CPH then commenced construction of the facility in the third quarter of 2017 and site works, such as the construction of roads and driveways and land excavation, are now complete.
It has achieved the construction milestones of securing the supply of water and sewerages services, commenced pouring concrete of the foundation and walls, awarding mechanical and electrical contracts, and ordering of steel.
Here you can see the construction currently underway on the medicinal cannabis production facility at the Mernova Medical site:
CPH expect the walls, steel framing and roof to be completed by mid-February 2018.
By that time, the facility will also have a Level 8, Region 3 security level vault which will allow the storage of cannabis product worth up to C$31.25 million (A$32.12 million) in value.
Construction is scheduled for completion around the same time that the July 2018 legalisation of recreational cannabis in Canada occurs.
CPH blazing ahead
As evidenced by the company’s newsflow over the past six weeks or so, CPH is wasting no time in progressing its global expansion. With legislation globally becoming more and more accommodative to cannabis producers and distributors, there is significant potential on offer.
However, both the company and industry are in their early stages, so investors should seek professional financial advice if considering this stock for their portfolio.
With recent expansion into the growing markets of Switzerland, the UK and Colombia, along with the opportunity to lift Australian cannabis exports, and its production facility progressing in East Canada, CPH is taking the opportunity at hand and strategically expanding is business.
And if recent share price rises are anything to go by, these developments are attracting investors’ attention too.
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